Dial Corp. v. MG Skinner & Associates

Citation: 180 F. App'x 661Docket: No. 04-55254

Court: Court of Appeals for the Ninth Circuit; May 12, 2006; Federal Appellate Court

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Fireman’s Fund Insurance Company is appealing the district court's order from November 25, 2003, which granted Federico Sayre relief under Federal Rules of Civil Procedure 60(b)(4). The appeal is within jurisdiction according to 28 U.S.C. 1291 and the collateral order doctrine. The court determined that the order fits the exception for appealable collateral final orders established in Cohen v. Beneficial Indus. Loan Corp.

The background involves a contract from January 1986 between Dial Corporation and Carson Metal Processing, Inc., where Carson was to dismantle equipment for Dial and provide liability insurance that named Dial as an additional insured. However, Carson's broker failed to add Dial to the insurance policy. In February 1986, an incident on Dial’s property resulted in a lawsuit filed by attorney Sayre on behalf of individuals claiming exposure damages. Dial later sued Carson and Skinner for negligence, leading to a 1989 settlement that assigned claims against Skinner to Sayre as trustee for those who settled.

Sayre initially represented Dial but was replaced in 1991. Despite not formally dismissing Carson from the suit, Skinner filed a summary judgment motion without notifying Carson. The district court ruled in 1991 that Carson’s negligence caused Dial’s damages and ordered indemnification from Carson to Skinner for attorney's fees. Although Sayre was not a party to the suit, he was found jointly liable for the indemnity judgment. Dial's appeal on this ruling was dismissed in 1993 due to lack of standing.

The case reopened in 1998 when National Union Fire Insurance sought relief from judgment, followed by Skinner's attempt in 1999 to declare Sayre personally liable, which was denied. Skinner later sought to levy against Sayre's bank accounts based on the 1991 judgment, prompting Sayre to file multiple motions for relief from judgment under Rule 60(b).

Sayre's initial two motions were denied for noncompliance with Local Rule 7-3, but he succeeded on his third motion, which led to an order for relief from judgment now under appeal. Fireman’s Fund Insurance Company, as Skinner's assignee, renewed the judgment on September 11, 2002. Generally, motions for relief under Fed. R. Civ. P. 60(b) are at the district court's discretion but are reviewed de novo if a Rule 60(b)(4) motion claims a judgment is void, as this is a legal issue. The district court had the jurisdiction to vacate the judgment since a Rule 60(b) motion is part of the original proceeding, and a void judgment is considered a nullity, obligating the court to grant relief. It was determined that Sayre's Rule 60(b)(4) motion was not time-barred due to the exceptional circumstances surrounding void judgments, which exempt them from usual timeliness standards. The court also noted that it is not required to assess whether Sayre had a valid defense before voiding a judgment that violated due process principles, which necessitate proper notice and an opportunity to be heard. Sayre lacked adequate notice regarding the indemnity claim against him, which was only briefly mentioned at trial, and he was not able to defend himself prior to the judgment. The court concluded that the original judgment was void due to this lack of due process, affirming the November 25, 2003 order granting Sayre's motion for relief under Rule 60(b)(4). The disposition is not to be published or cited in future cases except as allowed by 9th Cir. R. 36-3.